Road to Becoming a Successful Trader

Led by Buffy

February 10, 2004

A " Thank up " to all who attended and contributed their thoughts and experiences to Tuesday’s discussion regarding taking the road to being a successful trader. While I always like to credit everyone for offering their ideas, so many varied ideas and points were offered that the discussion became more of a " free-for-all " with comments offered in many directions. Midge was nice enough to have summarized many of the ideas related to the road to becoming a successful trader into general concepts that were helpful to many as they worked toward trading consistency. The actual edited discussion follows the summary.

A reliable system – It seemed that the traders finding more consistency in their trading had found, learned and refined a reliable trading system that worked for them. Many of you commented on different systems involving different studies, methods, timeframes, etc., but overall those traders finding more consistency had found a system they have confidence in and were comfortable using. Their system also put the trading odds in their favor, or as Rice stated, had a " positive expectancy " . They also developed rules they follow when considering and taking a trade with their system and that they were a crucial part of the system. (What they found was that they were the " Holy Grail " ). Some traders had taken a break from actual trading while developing, observing, fine-tuning and testing a system in static and real time. Many used a simulator or paper traded a system during breaks from trading. RDK had a great comment that something he found helpful was " to focus on 1 or 2 setups only " . Remember, you don’t have to know everything about the market to be successful; you just need to know one or two setups that you " own " as NQoos and others keep saying. As Buffy has always said " If you aren't making money consistently on one time frame, go up in time until you are. " This was confirmed by many traders to have " worked for them " including Esurfer and I. Some suggestions were the either the 532T or 550T, the 990T and also the 15M taking entries/exits on a tick chart.

Emotional control – We also discussed that those having more success in their trading controlled their emotions. They recognized their fears but set them aside, and maintained the discipline to trade within their rules and system. Emotional control also involved learning more about yourself, your emotions, and your personal attributes that kept you from finding the success you are looking for. For example, Rice and I mentioned having to deal with a " perfectionism affliction " to trade more successfully. Turned out perfectionism was a major one for Buffy also. Another big step towards being a successful trader is to realize you don’t have to get every point from the market to be very successful. There is always another trade coming. Others also mentioned their difficulty with accepting losses. It was recognized that losing and being wrong is going to happen in trading but being able to keep losses small, reviewing losing trades for their lesson, and emotionally putting losses and fear aside was crucial for trading objectively in the future and gaining consistency. Treat every trade as the first one of the day.

Chat room – We discussed that some found success by talking with other traders about successful and failed setups and trades, and posting their trades and charts in the chat room for other traders to examine and offer suggestions. This also helps to deal with the fear of being wrong many beginning traders have. The traders who have found more consistency such as Bill, Birdman, Esurfer, Scorp and 2BR reviewed and posted their charts in the room, asked many questions, and/or sought feedback as they worked toward consistency. Everyone is always encouraged to review, mark and post their charts, both wins and losses, as well as ask questions regarding possible setups so all can benefit from the information. Don’t be shy. The money you save may be your own. It was helpful for those above; it will probably be helpful for you. Scorp also mentioned some successful traders find a chat room distracting during trading and they post and discuss charts after market is closed. Remember, you have to do what is comfortable for you to be successful.

Thanks for adding your thoughts and experiences to Tuesday’s discussion. I think we all benefit by knowing each other’s experiences and finding we are not alone in ours. And again thank you Midge for the summary.

Here is the cleaned up chat:

16:31 @Buffy2: Welcome to the discussion on the Road to being a successful trader
I really feel others in the room would benefit if each shared their thoughts on this as we go along
The first thing to discuss is how long did you search for the Holy Grail before realizing it is yourself? I have watched it take months and years in a trader.
16:34 rdk: I think that a lot of the people who get into trading are very motivated, and many are perfectionists... so by nature, they want to capture every single move... when we realize that this is not possible , and not necessary. to be very successful, it opens up many doors in the right direction
16:34 @Buffy2: totally agree and it is one way to help stop losing both money and the stress associated with trading by not going for all the pts the market is offering
16:35 Tonkadad: Its been a slow realization, I finally took a break back in September and got back into it December last year with a new outlook
16:35 Rice: I read this fairly recently in soon Van Tharp's book, but what is actually meant by 'it's yourself' is a concept that doesn't sink in just from reading about it. It's iterative and I'm still at it.
16:35 @Buffy2: I have heard of traders who have spent years and thousands of dollars on systems before realizing that they themselves were the answer
16:36 @Buffy2: exactly rdk

16:35 rdk: yes... I forget where I saw it, on dacharts, or somewhere on NQoos site, " you don't own every trade " and that is true, but you don't NEED every trade out there
16:36 @Buffy2: it is yourself in the sense that you need to learn about yourself to be successful and control emotions and have discipline

16:36 abe1618: I wish scorp were here cause his charts raise interesting questions
16:37 @Buffy2: what questions do they raise to you
16:37 abe1618: well, regarding discipline, psychology, etc
16:37 @Buffy2: the mind sees what it wants to. If a trader is emotional over a trade either because of the money on the line or fear of being wrong, they usually can't listen to what the market is saying
16:38 @Buffy2: remember the graphic scorp did for the Douglas discussion www.dacharts.org/archives/discussion_topics/disciplined_trader_classes/scorp_douglas_step6
16:39 @Buffy2: That is so true. When you are trading and if someone was sitting across from you, they should not be able to tell if you are in a trade, if you just lost or if you just had a winner.

16:37 rdk: I think one of the hardest things about becoming a successful traders -- the marketplace is full of either people with empty promises or easy success (usually selling something), or people who tell you that being a successful trader is impossible, so you may as well give up now
16:40 @Buffy2: true there are those that promise and say you can't make it. But with the willingness to work and study just about anyone should be able to at least become consistently profitable
16:41 rdk: but most people will not tell you that Buffy, that is the thing
16:41 clayidus: well I have a different reason for trading- to prove to the world that I can be successful at trading
16:41 @Buffy2: that isn't a good reason clay

16:41 clayidus: I know
16:41 @Buffy2: better to prove to yourself you can be successful at trading IMO. How long have some of you been trying to learn to trade?
16:41 Tonkadad: 3 years - its been a slow bleed
16:42 bill: Yup Tonk

16:41 abe1618: it's funny - everybody keeps focusing on emotional side of trading
16:42 @Buffy2: it is important abe
16:42 abe1618: meanwhile, in my opinion, having the right rules is the most important. If you do not have a good system... even best discipline won't help
16:42 Tonkadad: its critical, the emotions, at least for me
16:42 rdk: it has been a side thing for me for some time, last several months I have been able to devote more time during the day to it
16:42 @Buffy2: usually you can't follow the rules if you are not in control of emotions
16:42 rdk: abe - but the best system won't work if you cant' follow it
16:42 @Buffy2: exactly rdk
16:42 Rice: Steenbarger would say that you shouldn't lack emotions, but be aware of them and what they're telling you, and be able to detach yourself from being controlled by them.
16:43 @Buffy2: that is why emotional side is so important
16:43 Tonkadad: the system is you
16:43 @Buffy2: well said tonka
16:43 rdk: and many systems aren't entirely mechanical, they do have a degree of subjectivity -- that's why objectivity is crucial
16:43 @Buffy2: true rice and that is hard
16:43 Rice: much harder than most will realize (or admit) at first, and an evolving process.
16:44 abe1618: oh I agree it is very important
16:44 Buffy2: yes trading looks much easier than it is which makes it hard for many as they have to admit that as a first step.
16:44 abe1618: just wanted to point out that rules/system comes first and I am not referring to mechanical
16:44 rdk: abe, I'd agree, you do have to have something to base your learning from
16:44 @Buffy2: what was the first thing you did to get started down the road to success?
16:44 @Buffy2: Biglargra took a break - I just recommended that to someone else a few weeks ago also
16:45 @Buffy2: how did you stop losing? Quit trading real money? learn to limit your losses?
16:45 Tonkadad: I think the best thing I have done is #1. take a break from trading and #2 hook up with this group.
16:45 Rice: I find that it's useful to separate two learning processes: finding an approach that is psychologically suitable to oneself, and understanding/accepting one's psychology well enough to make that possible. Then you have to practice until you have confidence.
16:45 abe1618: rice - could not agree more
16:46 @Buffy2: lot said there rice and totally agree
16:46 abe1618: seriously though, how does one define success?
16:46 @Buffy2: while you are learning you should stay in your comfort zone. Once you are consistently successful then you can start pushing outside your comfort zone.
16:46 abe1618: is success not losing? Is success making a lot of points?
16:46 abe1618: is consistency the real success?
16:46 @Buffy2: success is following your rules like the feedback on discipline recommended before that Google suggested. The money will follow.
16:46 clayidus: Buffy you have to know first why are you trading
16:47 clayidus: and secondly what are your monetary goals
16:47 Buffy: no monetary goal clay. Please read the January Ensign Newsletter.
16:47 rdk: buffy - I think you hit upon a key there, sometimes you have to stop trading the real money, and work with simulations to learn what it's like to work without so much emotion
16:47 @Buffy2: you are always going to have losers - learning not to take them personally is what is hard for many
16:47 abe1618: you see, in my opinion, people blame too much on lack of discipline
16:47 Rice: I would add, Buffy, that success requires rules (or at least--Steenbarger again--'planful behavior') that provides positive expectancy
16:47 @Buffy2: hmm I hear them blame the market all the time
16:48 abe1618: the fact is that most traders employ rules and systems that are only around 50% successful which means you would have to be absolutely perfect in executing it in order to make money
16:48 @Buffy2: which is fine if they keep losses small
16:48 rdk: I think the no monetary goals thing is very difficult though... for people who are going to make a living from trading, they have to have some sort of goal
16:48 @Buffy2: and if the market isn't giving those pts for a couple of days, that puts them behind for the week and where is their focus going to be - NOT on what the market is telling them for sure.
16:48 jr01: one can never blame the market , cause market goes up and it goes down , we have a choice of going long or short
16:49 Rice: abe, that's what I was getting at earlier, You need a method that you can do.
16:49 abe1618: and that actually makes points, rice...
16:49 @Buffy2: yes you do need a method and that takes less work than following it imo
16:49 rdk: it seems like there are many good methods out there though
16:49 abe1618: you see, there's where I disagree with buffy. We say many " good methods " . Yet if you do not have the years of experience, it turns out you could not trade them.
16:49 rdk: ones that actually are good, not that claim to be
16:49 @Buffy2: there are many many ways to trade the market and make money. You see the charts posted all the time at dacharts. There were 8 different systems in the room that caught the Oct low after 911 and I am sure many many others also caught it
16:50 Rice: rdk, abe, the expectancy calculation will help you there. Once you have a positive, consistent value, it's just position sizing.
16:50 abe1618: because the key in all of them is avoiding losing entries and/or getting out fast which great traders can do but the beginner can't possibly do.
16:50 rdk: rice - what do you mean by expectancy calculation?
16:50 @Buffy2: losses small is very very very important
16:51 Tonkadad: you can't avoid losses
16:51 @Buffy2: you think I don't have losses abe? I do - can't be avoided
16:51 Tonkadad: the only way you can is never get up to bat
16:51 rdk: abe - several of the systems on dacharts are not that complex, someone with little experience could pick them up with study
16:51 abe1618: right buffy - but your experience allows you to keep them small
16:51 @Buffy2: agree rdk not knowing price action and where it is saying you are wrong is what makes them big. This is easier to see the HIGHER up in time you go and the reason for me always saying, If you aren't consistent on one time frame go UP in time. I watch many go down in time, only to lose more.
16:52 abe1618: rdk - in my opinion, for all of them, a beginner would have them lose money even if they followed the rules.
16:52 @Buffy2: Basic price action can be learned by anyone
16:52 @Buffy2: no abe, do not agree on that. If they are not making money on one tf then go UP in time until they are consistent
16:52 abe1618: I don't know if you realize buffy, how many decisions you make on the basis of experience.
16:52 rdk: abe sounds like one of the people telling new traders that they are doomed to fail ;)
16:53 abe1618: not at all rdk
16:53 @Buffy2: 2xbline trades on one chart. more losers but still profitable IF you learn price action to keep losses small and go UP in time until you " own " the setup you are working on.
16:53 Tonkadad: well, its like anything you don't go from crawling on all fours to running a marathon 16:53 Elroch: I like your analogy, Tonka :)
16:53 clayidus: well he is partially correct
16:53 abe1618: what I am trying to say is that none of these systems can be traded just by " following rules " No matter how disciplined you are.
16:53 @Buffy2: still don't agree, sorry. We agree to disagree. That class for the price action fancy names of MOF and Slingshots and Bline setups sets forth rules to use. Follow them and you should be profitable. Finding the TF and rules for entries and exits in your comfort zone is also necessary.
16:53 rdk: abe - they are not purely mechanical, if they were, we'd all program tradestation and sit on the beach
16:54 rdk: but they are not nuclear physics, either
16:54 @Buffy2: because this system is based on PA you can
16:54 jr01: well I think new traders will fail at first till they get to know all the rules .what to do and what not to. (Buffy: in essence you are saying until the " own " the setup. Screen time does that.)
16:54 leslie: hi buffy. how do you know what time frame to choose. I keep going back and forth between 144 343 and 532. any advice?
16:54 @Buffy2: if all new traders started out with the 532T or 990T, or even a minute chart if that is what they are used to, and traded just the setups in class two weeks ago they would be profitable
16:55 abe1618: I think what I am really trying to say, is that in my humble opinion, the only way for a beginner to succeed is to accumulate a lot of experience which might mean paper trading for 12 full months (Buffy: Depends on the value of the time they put in learning Abe. Asking questions, marking and posting charts for discussion are a few ways to shorten the learning curve...for some by a lot.)
16:55 @Buffy2: higher one usually wins UNLESS strong enough to walk the change of trend up the time frames
16:56 rdk: buffy - I'd have to agree, if you use one of those TF's, and make sure that what you are doing is agreeable with the next higher TF...
16:56 ESurfer-: if a trader can't make money trying to trade a system at what point do they realize that it is not them but the system that does not work.
16:56 Tonkadad: I am having a problem watching different TF's
16:56 Elroch: Which might be why longer time frames are less noisy - bigger and better sample
16:56 rdk: I know of trading shops that get people going live, and profitable, in less than 12 months
16:57 abe1618: look at the successful traders like birdman or esurfer or the many others. They spent countless hours in front of a screen
16:57 rdk: elroch - agree, larger timeframes definitely less noise
16:57 ESurfer-: Ahh but how do you know I'm successful or the others?
16:57 @Buffy2: esurfer, they have to figure out if the system is in their comfort zone
16:57 rdk: abe, I am not saying from day 1 a new trader would be profitable... but it may not take 12 months either
16:58 @Buffy2: now if a system is the many they have tried and nothing is talking to them OR it only talks in hindsight then I would suspect time to ask yourself some questions
16:58 rdk: not many people ride a bike right away either -- everything has some learning curve
16:59 @Buffy2: birdman was not consistent until he started posting charts every night and going over them Esurfer used to ask a lot of questions as did 2br and bill. It makes a difference in the learning curve. There are many in the room that can answer questions now

16:57 ESurfer-: Ahh but how do you know I'm successful or the others?
17:00 abe1618: esurfer - good question
17:00 ESurfer-: There are a lot of systems out there that do not work over the long haul - they work periodically at best. some do work but most don't. so the biggest challenge is to do your own homework to figure out what actually works and what does not
17:00 abe1618: we don't show statements here so tough to know who is successful
17:01 @Buffy2: bline for years and we are going on 2 years for 2xbline
17:01 Tonkadad: you have to be careful what you tell yourself, everytime I think I need something outside of myself, it is usually a diversion from what I need to focus on
17:01 abe1618: thanks esurfer - that's the point I was trying to make as well
17:01 @Buffy2: making sure you understand the rules which is why I tried to be so exact 2 weeks ago. Do you all mark your charts at night? Or during the day. For those of you who do, does it help.
17:02 scorp2: I mark charts everyday
17:02 bill: It helps me out a lot
17:03 rdk: I don't mark them, if I recognize a pattern, I don't feel like I need a label telling me what I already see... different obviously if I am showing it to someone else
17:03 @Buffy2: rdk marking them seems to help many pick up the nuances on why one worked and one didn't and see what you were missing to know.
17:04 rdk: buffy, marking them how exactly do you mean? marking all signals, fib levels?
17:04 @Buffy2: you mark your system - whatever you are learning to do, you mark the charts
17:05 @Buffy2: do you go over your losing trades? Figure out why they happened. Even if they were losers - if you followed your rules they were still winners.
17:05 scorp2: its not always just the setup - its the point of decision making
17:06 @Buffy2: agree scorp and for me it is a final check - macd going in direction of trade are the ribbons in the right zone
17:06 scorp2: its as the setup is occurring that seems to cause most people the problems
17:06 rdk: I agree scorp - the setups can be easy to spot - deciding whether or not and when to trade on it is a difficult detail
17:07 ESurfer-: One thing I agree, is moving up in time frame is easier to trade
17:07 @Buffy2: for sure esurfer and I have suggested it very often but many don't have the patience to wait for the signals on higher tf
17:07 Elroch: I think if there's no reason not to, you must trade your setups. otherwise the best ones always get away
17:07 rdk: here's a question -- how do you know when a setup isn't working on a trade? Do you wait for indicators to change, bump up against stoploss? How do you know when to bail
17:08 @Buffy2: Price Action - same as I said before - that is what keeps your loses small and tells you when to exit IMO You do not have to sit and wait for your stop to get hit.
17:09 @Buffy2: true elroch but you know many times the entry on the 532T is less than a pt difference on lower tf - many of you have studied that.
17:09 rdk: that is a big category though buffy, price actions takes into account a lot of things
17:09 @Buffy2: HH and HL uptrend - LH and LL downtrend - anything else chop, triangle range
17:09 Elroch: rdk - I think it depends on how far the trade has gone. For instance, if the stochastics turn back without breaking past the last high, you might need to bail out early. Later on that would not be a reason to exit
17:09 clayidus: Again Buffy,this raises the question of stop losses
17:10 @Buffy2: stop losses are set by PA so really it is back to that
17:10 ESurfer-: So why not move out on a very high TF so that a setup can be discussed in real time as it is occurring. Traders
17:10 @Buffy2: of course you do and they need to be in your comfort zone
17:10 Elroch: Buffy - must be on a time frame long enough not to be too noisy though
17:10 @Buffy2: read the discussion on stops and exits - many many many of various ways out there . My favorite is to use the high/low of the bar I am filled on plus a tick or two.
17:11 Elroch: Crosses of EMAs are good to know if trend is still ok, particularly on shorter T/Fs
17:11 @Buffy2: going to a higher tf to learn the setups and have time to play them has helped many to learn what is noise and what is real on the lower tfs adds to the learning
17:12 abe1618: here is what I would like see: more posts of FAILED trades with discussion on why to take or not take them. (Buffy: I do say in ventrilo a trade " cost me " and usually go on to explain if it was right to have take it or what I missed that said I shouldn't have. I am also trying to cover these in the playback write-ups.)
17:12 Elroch: Different time frames do behave differently though, so you need to get familiar with the t/f you trade
17:12 ESurfer-: but most traders are going to get cleaned out trying to trade a system like 2xBline on a small TF (Buffy - Not if they go up in time cause they can't trade that TF consistently profitably.)
17:13 @Buffy2: I am always saying if you are losing on one tf go HIGHER
17:13 Elroch: Good advice! Gives you a better chance to see the setup.
17:13 Tonkadad: Abe, don't take this the wrong way but nobody can prove a system to you, you have to do that yourself
17:14 rdk: some chat rooms do have more posting of their actual trades, but I think that results in people trying to copy the trades and not learn..
17:14 @Buffy2: posting actual trades RT results in piggybacking which many lose at. Entries can be conservative or aggressive depending on comfort zone for the day
17:14 ESurfer-: posting actual trades show the other traders how it is done IMO
17:14 @Buffy2: rather teach you to fish talking about the setups
17:15 scorp2: the biggest problem I see around here is that there are losing trades; but the are not focused on at all - if you came here as an outsider, no one would think anyone was not losing
17:15 rdk: esurfer - I'd agree, different timeframes are different... some something like 2xbline on 532 shouldn't be THAT hard for a newer trader... there are not as many setups on it, plenty of time
17:15 abe1618: right, scorp
17:15 ESurfer-: What is everyone so scared of posting real time trades. I made my biggest improvement in trading learning for traders that actually post what they are doing in real time. You can see exactly what they are doing... how they are thinking... when the commit and most importantly when they bail and how they react to that losing trade.
17:16 rdk: esurfer - that is a good point, hard to find though
17:17 bill: yup
17:17 rdk: I haven't seen many people in here say " here is the setup, entered at 1139.00 " or whatever
17:17 abe1618: one thing is certain, if there were more buffys, there would be a whole lot more successful traders
17:17 @Buffy2: rather have LL for looking long and LS for looking short than exact trades because that is each traders comfort zone and I will not be forcing my way on you because if you are uncomfortable with my way than the market can not talk to you as you are emotionally involved right from the get go
17:17 bill: True abe !
17:18 rdk: but the exact entry is a very key point
17:18 scorp2: I see that totally different, trade entries are as important as setups
17:18 rdk: you can have a great setup, get a bad entry, then get stopped out before the move happens
17:18 jr01: Buffy why do you feel like you would be forcing it on anyone. No one has to take the trades
17:18 scorp2: that entry and that exit could be the difference between a winner and loser but that is my opinion
17:19 @Buffy2: cause there are conservative entries and aggressive entries as I said. Which are you? For many setups I do mention where an aggressive trader would enter and what the conservative one would wait for.
17:19 bill: I think . . . . the person should decide if or not they are comfortable . . .. but the entry and exit should be marked or stated
17:19 rdk: I agree,there are diff entries and exits for diff people
17:19 jr01: you can still post yours and let everyone else decide for themselves to learn from
17:19 abe1618: well, I think it all depends - if buffy were selling a system here, then yes, I would want exact entries and exits
17:19 rdk: but if someone draw a chart with an arrow that says " buy " to a bar that is a point wide...
17:19 Rice: rdk, I had to go for a bit. Expectancy is calculated as (Probability of win*average win)-(Probability of loss*average loss). It measures dollars made per dollar risked. Ninja Trader calculates it automatically. If the number is negative, you'll eventually lose all your money.
17:20 abe1618: but remember, buffy is not selling anything -she is just teaching for FREE. So asking her to post exact entries, not the right thing to do. Yet Scorp is right - entries matter a WHOLE lot
17:20 rdk: and teaching very well :)
17:20 @Buffy2: I sent out 266T charts marked with the entries and exits

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17:20 scorp2: we don't need to focus on Buffy, there are nearly 100 traders in here during the day What are they doing?
17:21 ESurfer-: good point scorp
17:21 @Buffy2: when we have a shelf, I say the market has given us a nice shelf. If you don't know what to do with the shelf, you are not ready to take the trade IMO
17:21 jr01: can you talk about some of your strategies? not just Buffy but all.
17:22 @Buffy2: this is suppose to be on becoming a successful trader and your steps. I am in the room a lot....just ask.
17:22 rdk: good point buffy
17:22 jr01: but one learns from watching other
17:22 rdk: we haven't talked about simulation much, is that something we might want to talk about a little this evening? How helpful is it? How different is simulation from real trading?
17:23 @Buffy2: Read January newsletter Covers learning a setup right from when you first are introduced to it to trading it profitably. Doesn't matter what setup. I can't add anything to it really. That is the homework :-)
17:23 rdk: I have read it, that's a good article
17:24 Tonkadad: I think we are getting off track here, as much as would like Buffy to hold my hand, its up to each of us to make it work. imo
17:24 @Buffy2: good point tonkadad. If you make it work YOU will trust it and trade it well for years to come
17:25 rdk: ok, I will just throw out there that spending them doing simulated trading during the day is helpful for me to see how I watch the market when it's not real money on the line -- and to see how I should be looking at it when it is

17:26 @Buffy2: we had that setup going both ways today 2004-02-10/B_44.png You hear me say in room hummer getting his beak, spread on k/d lt stoch, etc etc Now if I add an entry price and you don't know what the setup is, how are you going to know the exit ?? Fear of losing and being wrong holds many back. Makes you afraid to trade when you should. And then you talk yourself into a trading when there are reason you shouldn't.
17:28 Rice: original chain of thought was how to define success. I submit figuring out a method that you can trade with positive expectancy is one key element. Developing habits to do exactly that and understanding position sizing are others.
17:29 @Buffy2: true Rice
17:29 scorp2: I can preach about the steps, and draw nice pictures, and charts but I am not successful. Who can I trust?
17:30 @Buffy2: scorp when I look at your charts your trade is usually against the ribbons just an FYI
17:30 scorp2: that's because I take late entries because I am waiting for what the setup looks like in hindsight.
17:30 rdk: I think fear of past losses holds many from action when they should buffy. Also, fear of success for some, strange as it sounds
17:31 @Buffy2: true also rdk
17:31 rdk: sometimes it is possible to become so enthralled with the pursuit, that we don't know what we will do once we actually reach the goal
17:31 abe1618: scorp, so would you blame your problems just on poor execution in real time?
17:32 @Buffy2: well Scorp check the ribbons for what zone they are in. Only time you be wrong is when they are decked which hasn't happened too much lately
17:32 scorp2: I am a master of the simbroker
17:32 @Buffy2: yes you are. So have you asked yourself why a problem with real money on the line? The other thing is simbroker only one prior day of data where the real market has many days. Think that is part of it? One trader thought so for him
17:34 scorp2: definitely, simbroker you have less expectation for a direction
17:34 rdk: especially lower tfs
17:34 @Buffy2: true. For me to succeed I had to come to grips with perfectionism - Had it all my life I realized and it is just not possible in trading.
17:35 rdk: that is huge for me also - I hate being wrong, ever
17:35 scorp2: bingo
17:35 @Buffy2: I used to take the embroidery out if it wasn't pretty on the backside too LOL - That is how bad I was. Once I came to grips with that, trading was a lot easier, less stressful too. Life became easier also.
17:35 Trader: lol
17:36 scorp2: 1 profitable trader; 99 not?
17:36 Elroch: Yes - I know exactly what you mean. As a pure mathematician, I have the wish for perfection pretty bad. The markets are not deterministic :-(
17:36 rdk: if you do that with trading though, you will find yourself only closing losers when they hide a wide absolute stoploss
17:36 Rice: amen buffy. Perfectionism is hard to tell from greed--want to nail the absolute top or bottom tick, won't accept anything less, even if the trade has to go ten points against me first. (See, I have made progress. May I suggest that working on self-awareness is very important to this?)
17:37 @Buffy2: it is why you are the holy grail. If you don't figure out what is holding you back, trading can be so so hard.
17:37 rdk: rice -- good point... sometimes you might think it is greed, when really is perfectionism
17:37 scorp2: I have a hard time allowing a trade to go against me - at all
17:37 Elroch: Trying to get the toast exactly the right shade of brown...
17:37 biglargra: Have to just adopt a new phrase/expectation of being " perfect enough " if you know what I mean :)
17:37 @Buffy2: good one elroch
17:37 rdk: scorp -- I agree... but many of my good trades go against me a half point or so before they go the right way... and it's just noise, not necessary a bad entry
17:37 ESurfer-: keeping your losses too small just give you alot of small losses
17:38 Tonkadad: How about perfectly executing your system
17:38 rdk: esurfer - what do you mean?
17:38 @Buffy2: well I worked months on the entries I have discussed with you guys. Using that bar for initial stop loss usually works for me. There are times I will be stopped out, but if you are not upset over the small loss you just took, then you will be ready for the entry again even if the next bar.
17:38 biglargra: and ty for them buffy
17:39 scorp2: another thing some " successful " traders mention as a step is to refrain from spending time in a chat room during the trading day. And I find that to be the case for the most part, unless you are in a group that is focused on your setup, then the distraction is huge.
17:39 rdk: scrop2 - I have heard that as well, ironically
17:39 ESurfer-: scorp successful traders don't need chat rooms
17:39 @Buffy2: if you are to the point where you understand what you should be doing for what you are learning then yes that does help some. For others they benefit staying in - depends on the trader
17:40 bill: Yes, but successful chat rooms need successful traders
17:40 Elroch: scorp2 - interesting comment. Might be true that you at least need to be successful alone, then return to the chat room.
17:41 @Buffy2: treat each trade as the first of the day helps many also although it can be hard to do sometimes
17:42 Elroch: You use a bar as a stop, Buffy? I wonder how that compares with using the range of several recent bars, to avoid the randomness in the size of one bar. I think most traders just pick a fixed stop and stick to it. I've seen that approach used on daily charts - stop is a multiple of average daily range. Backtesting suggests that having stops too tight seriously damages your chances of profitability (with the systems I've looked at).
17:44 rdk: elroch - I think so too, a fixed stop, or if something else tells you that the trade is breaking down before you hit the stop. It all depends on the system
17:45 ESurfer-: agree Elroch. Especially on the ES which has a lot of noise. The traders I know that are successful using small stops don't trade ES and refuse to trade it. But LOL small is relative - what is a small stop. 1 tick, 1 point, 10 pts?
17:45 Rice: exits are worth several whole classes of their own. Chuck LeBeau says exits are single element with the largest impact on success or failure, but get 10% or less of peoples' attention.
17:46 Elroch: Yes. I do recall one backtest where anything from about 0.75 to 2 was near optimal, but that was an exception
17:46 @Buffy2: you don't have to wait for a fixed stop to get hit if you know it is going to be though IMO. So many traders just wait for the stop to get hit.
17:47 Elroch: Yes - can often save a large part of your stop when your trade just hasn't done what you needed it to do. Depends on how " big " your setups and targets are.
17:47 rdk: you just have to make sure that if you are using wider stops, that you have a wider upside too. Not much point risking 2 points to make .50
17:47 abe1618: would be an interesting poll to see how many folks here at least consider themselves successful
17:48 rdk: I agree buffy, if you can see it's not going your way, why wait to take out the whole stop
17:48 abe1618: anonymous poll
17:48 scorp2: abe, I tried - none responded
17:48 @Buffy2: didn't see it scorp what poll?
17:48 ESurfer-: I don't consider myself successful - not at daytrading/scalping. I do ok on position trades. After commissions, mistakes and bad fills takes a toll on my scalps.
17:48 scorp2: so as far as I can discern, no one is successful here. I am not successful. I am not further now, then I was 6 months ago; but that is my issue.
17:48 Tonkadad: I am not successful
17:48 @Buffy2: that surprises me esurfer we were looking at some of your old charts Friday night
17:49 abe1618: me neither, for daytrading
17:49 Rice: Perspective: I am not a good enough lutenist to give up my day job for a career in music. I'm improving steadily both music and trading. Commitment, attention, practice.
17:49 @Buffy2: don't compare to me compare to yourself I was so proud of my 5 pts one day but devastated when someone said they made 22
17:49 @Buffy2: go higher in time esurfer
17:49 ESurfer-: with position trades I have enough padding under the profits to make up for those. I have Buffy. Sing trading mostly. I will hold trades for several days. But then am I really a good position trader???? Any money can make money going long in this market.
17:50 Elroch: Consistency is what counts. Really, all you need to do is make money most weeks and not lose too much Easy said
17:50 abe1618: I know there's got to be some successful traders in here. Brach, for sure.
17:50 scorp2: I'm looking for a winning morning; forget day at this point
17:51 rdk: my simulated trading is going well, although I haven't switched over to the live acct yet, so that doesn't " count " yet, in most people's books :)
17:51 @Buffy2: It counts rdk. Some are close to going real I think. You are building your confidence in the setups so only issue when real is money on the line.
17:51 Rice: One thing I found very helpful was to reread Douglas after thrashing around for a year. Got much more out of it. Too bad he put in all the flaky stuff about neurophysiology, which, to be kind, isn't his long suit.
17:51 abe1618: not for this poll, buffy :-)
17:51 @Buffy2: what poll I missed it
17:51 Elroch: Funny thing is, I've often found straightforward systems that are very reliable, but I haven't been so good at execution (Buffy: Did you figure out why?)
17:52 abe1618: we are doing a poll on who considers themselves successful daytrading real money
17:52 @Buffy2: oh ok abe
17:52 ESurfer-: Also define successful. Successful is just profitable or making a living?
17:52 @Buffy2: yes I would like to know for feedback to the room
17:52 abe1618: tried to, esurfer earlier. very tough
17:52 rdk: abe - look at your sample though... Most people who consider themselves successful aren't going to be as generous as buffy with their time, they are off doing something else since the mkt is closed
17:52 Elroch: Lack of belief that I'd really got it right, and frequently making changes, I guess
17:53 @Buffy2: do you all know what to look for when I say spread between k/d both stoch and between each one also?
17:53 abe1618: this poll is very far from being scientific :-)
17:53 @Buffy2: lol they never are scientific are they
17:53 Elroch: I've had decent sustained success on Simbroker, but it is more forgiving than the market, Like a few weeks without a bad day.
17:54 rdk: simbroker doesn't have a spread
17:54 @Buffy2: commission set at 20? Or at least double what you pay
17:54 @Buffy2: why aren't we talking about losing trades at the end of the day when I ask if any questions? That would be a great forward going thing wouldn't it?
17:54 rdk: I have found that one of the things that has helped me has been to focus on 1 or 2 setups only
17:54 ESurfer-: Trading ES would be easy if you could get simbroker instant fills
17:55 Elroch: Buffy - with commission set at $20, I'd have made a profit, but only marginally.
17:55 @Buffy2: offset with commissions high. It is in January 2004 Ensign Newsletter.
17:55 abe1618: pretty darn good idea, buffy about eod talk on losers
17:55 ESurfer-: with simbroker you will be filled on winning trades that you would not have been filled in the real market. you have to realize that. Missing winning trades really effects the bottom line. In real life you will take all the loosing trades and miss some good winning traders. Bad fills will turn what should be a winning trade into a BE or loser and it will turn a BE trade into a loser. So you have to factor all this in. And that is why moving up in TF is very helpful because it all becomes less of an issue. What is half a point when looking for 6-10 point trades but half a point is a lot when your avg is 1 point
17:55 Elroch: (actually almost all the time if you use limit entries)
17:56 @Buffy2: posting your chart and talking about your losers is starting to walk down the path as the ego thing is being dealt with IMO
17:56 @Buffy2: only if you use limit, I don't. I use market or enter with bs and ss
17:57 rdk: esurfer - a quarter point on ES becomes less important when trading higher timeframes
17:57 Elroch: True ESurfer. The best you can reasonably rely on is a buy at the ask. Or even 0.25 points - although could be another tick on the exit.
17:57 rdk: you have to ask yourself if you should just buy @ the ask and not risk missing the good trade " I look for 10 point trades, but I can't seem to find them "
17:58 @Buffy2: what you are talking about is why I don't use limit. For other traders not using limit would be outside their comfort zone.
17:58 ESurfer-: they are there my friend - just a matter of moving up in time frame
17:58 rdk: well I don't want to run a 10 point stop, either :) I'd rather have a string of smaller winners, anyways.
17:59 @Buffy2: I could never do that
17:59 Elroch: Limits are nice as targeted exits, and can be used for trading antitrend swings without waiting for price action. But not ideal for immediate entry always.
18:00 @Buffy2: ok lets make this constructive. For those of you who aren't successful what do you feel you need to become successful
18:01 Tonkadad: one would be discipline to mark charts and run playback
18:01 scorp2: a focused environment with a supportive group looking for similar setups
18:01 @Buffy2: ok tonka
18:01 kw24: stop taking entries in chop w/o 3 signal, exit before stop hit once trade starts to go bad
18:01 ESurfer-: So there you go... what has helped my trading the most is to move up in TFs... maybe some day I will be a great scalper and I'm still working at it, but for now, position trading is the only thing that is working well for me.
18:01 rdk: only take the setups that I know are the " perfect " setups, and translate what I am doing in simulation over to a live account
18:01 @Buffy2: yes that is discipline as it is easy to get distracted so that could be a goal for you
18:02 Tonkadad: I sit at the computer with the intent to do what I said above but 2 hours go by and I still haven't done it - not focused.
18:02 @Buffy2: today and yesterday you saw how the lt 2x stoch goes flat and if you must trade chop trade the ribbons and macd
18:02 @Buffy2: need to shut all else down until you have done it - then turn it all back on
18:02 rdk: I think maybe for newer traders learning the systems, it's better to just take 3 signal trades, and not worry about the 2 signal ones that do well
18:03 @Buffy2: not really rdk - learn the difference in the setup.
18:03 rdk: no? doesn't that give you a higher probability of success though?
18:03 @Buffy2: a 2 signal or a 3 signal can both be great movers.
18:03 abe1618: esurfer, for position trading you are still using same setups, but on much larger tf, i.e. 30 min?
18:04 rdk: I guess maybe that is just for me, because I like the idea of a higher probability of a winner... even if it means less trades
18:04 Elroch: 30 min is a great chart for longer term trades, because it deals nicely with people trading on a daily basis
18:04 ESurfer-: abe for position trading, I don't use any indicators. Mostly based on liquidity theory - supply and demand
18:05 @Buffy2: if you run minute charts with indicators remember they are not right when large enough gap is present. They will be right as the number of bars for an indicator largest setting is met for the day So a 9/3/3 isn't going to be right until 9 bars etc
18:06 Elroch: I find 30 min charts are fine if you ignore out of hours - gaps are rarely very big
18:06 ESurfer-: well there are different ways to read supply and demand
18:06 @Buffy2: well when they are ............PA is the footprint
18:07 Tonkadad: Buffy when you suggest using one TF, do you mean that's the one you go with don't look at any others for signals?
18:07 @Buffy2: if you are having problems with multiple tfs yes tonkadad. The system will trade on one tf
18:07 Tonkadad: ok and I am
18:09 @Buffy2: so was there anything constructive offered that I could do to help those not successful - no I am not going to put entry price and exit price
18:10 @Buffy2: exits for me are usually on the 266 macd crossing zero as you all know from ventrilo
18:11 rdk: buffy, is that exit regardless of what TF you took the entry tom? 532 or 990, still exiting with the MACD crossing 0 on 266?
18:12 @Buffy2: usually rdk If strong trend won't - like ribbon divergence sling with bline decked

18:14 Tonkadad: there is nothing more Buffy can do, its up to us
18:17 rdk: ok, next time I have a loser, if I can't figure out what was wrong, I will bring it up :)
18:17 @Buffy2: and you will be taking many steps down the road rdk Also as you post yours maybe others will ask about theirs and then the lurkers who still have ego in the way and afraid of being wrong will learn also. Many learned from birdman posting his but most as lurkers
18:23 rdk: well that is probably something I should start doing then... I watch during the day, but I don't mark at night - often I find it is related to something going on in another timeframe that I didn't notice
18:25 kw24: Thanks Buffy and Everyone!
18:30 @Buffy2: welcome kw I am going to try to remember to change my question at the end of market to anyone have any losers they want to discuss. We can also discuss them during slow times to stay focused
18:31 rdk: that is a good idea, Buffy - get the losers out there in the open - then decide if there was something that would have signaled not to take the trade, or if it was a true loser
18:34 amg: hello...just finished scrolling the class... thx!
18:34 @Buffy2: wasn't very organized but there sure were some good thoughts out there
18:34 rdk: it was a good discussion
18:35 amg: when trading any pattern, the key is to know when " it " didn't work.
18:35 @Buffy2: yes and for most the failure is a good signal also
18:35 amg: yes, buffy-- that's been difficult for me as it requires a quick mind-retooling
18:36 @Buffy2: true
18:39 rdk: thanks for the great discussion buffy... you can be on the lookout for some marked up charts from me now :)
18:39 @Buffy2: great rdk looking forward to them
18:39 rdk: great, thanks, have a great evening!
18:51 amg: buffy, I believe you are familiar w/Mark Douglas book " Trading in the Zone " ?
18:52 amg: but the 7 Principles of Consistency are worth reading every day
18:53 amg: You can even build a trading plan around them
18:55 amg: there's probably enough in either (of his books) that if you SCRUPULOUSLY followed either one, you'd do better. But the scrupulous part is where the going gets tuff
18:56 amg: For instance, one of the 7 is " I act on my edges without reservation or hesitation " ...
19:01 amg: .. and if you have and edge and don't act on it, you've just lost it
19:02 amg: I made a cheat sheet of his " maxims "
19:03 amg: The 5 Truth, the 7 Principles of Consistency, The 3 Trading Errors, and The 3 stages of Trading
19:04 amg: the 5 truths, etc is from Trading in the Zone

The Five Fundamental Truths

1. Anything can happen.

2. You don’t need to know what is going to happen next in order to make money.

3. There is a random distribution between wins and losses for any given set of variables that define an edge.

4. An edge is nothing more than an indication of a higher probability of one thing happening over another.

5. Every moment in the market is unique.

The Seven Principles of Consistency

1. I objectively identify my edges.

2. I predefine the risk of every trade.

3. I completely accept the risk or I am willing to let go of the trade.

4. I act on my edges without reservation or hesitation.

5. I pay myself as the market makes money available to me.

6. I continually monitor my susceptibility for making errors.

7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.

Trading Errors

1. Not Predefining risk before entering a trade.

2. Not cutting your losses.

3. Letting a winning trade turn into a loser without taking any profits. Have an organized, systematic, money- management regimen for taking profits when the market goes in the direction of your trade.

The Three Stages of Trading

The mechanical stage

1. Build the self-trust necessary to operate in an unlimited environment.

2. Learn to flawlessly execute a trading system.

3. Train your mind to think in probabilities (the five fundamental truths).

4. Create a strong, unshakeable belief in your consistency as a trader.

The subjective stage

1. Use anything you have ever learned about the nature of the market movement to do whatever it is you want to do.

2. Learn how to monitor your susceptibility to make the kind of trading errors that are the result of any unresolved self-evaluation issues.

The intuitive stage

1. Work at setting up a state of mind most conductive to receiving and acting on your intuitive impulses


19:22 amg: ... when you can be the master of one simple thing, you are ready to take on one more simple thing.
19:24 amg: it's an evolution... sort of like growing... you don't ever really get to a point and you're done... new things happen and you must continue learning